Launch of Chrysler's new minivans may have had slower start than expected

Chrysler LLC says it's pleased with sales of its new
minivans, but there are signs that the vehicles _ which are crucial
to Chrysler's success _ aren't doing as well as the company had
hoped.

The company plans to idle its Windsor, Ont., minivan plant for
two weeks in January in an attempt to reduce inventory, and it has
put up to US$1,500 worth of incentives on the minivans.

The Dodge Grand Caravan is also in danger of losing its spot as
the top-selling minivan in the U.S. to the Honda Odyssey, which was
outselling Dodge by 3,300 vehicles through November.

``The vans are a little bit slow, sales-wise, and customers have
been a little bit slow to come around to them,'' said Mark McCready,
vice-president of market planning and pricing for the Carsdirect.com
automotive website.

It's not all bad news for Chrysler.

Sales of the more luxurious Chrysler Town & Country were up 10
per cent in November _ the second full month of sales _ compared
with the year before, according to Autodata Corp. Dodge Grand
Caravan sales fell six per cent, a drop Chrysler blamed on the
elimination of the shorter, lower-priced Dodge Caravan model.

Still, that was a better performance than in August, when sales
of the aging Caravan and Grand Caravan were down 28 per cent.

Chrysler remains the industry leader, with the Dodge Grand
Caravan and Chrysler Town & Country together controlling nearly 40
per cent of the minivan market.

There's also been some buzz about the features on the 2008 Dodge
Grand Caravan and Chrysler Town & Country, particularly the
second-row seats that swivel so the occupants can sit around a
table.

``They have been very, very well received,'' said Steve Miller, a
Dodge dealer in Vestal, N.Y. Miller said he's picking up a lot of
customers from General Motors Corp. and Ford Motor Co., which are
getting out of the segment. But even Miller, who also sells Hondas,
said he's selling Odysseys as quickly as he can get them on the lot,
and he notes that most buyers of the Honda minivans aren't
cross-shopping at Dodge.

Chrysler chairman and CEO Bob Nardelli said Thursday that sales
are meeting the company's targets and the plant shutdown has more to
do with projections for a slow industry in 2008.

``I think it's more a function of looking at the industry and
really making sure that we appropriately size ourselves,'' Nardelli
said during a holiday party for media in Detroit. ``We certainly
don't want to get back to where we were, and having an overinflated
inventory.''

In 2006, Chrysler dealers revolted when the company produced too
many vehicles and tried to push them off on dealers.

McCready said Chrysler's price-conscious target customers were
among the most affected by higher fuel prices and the housing slump.
Early on, McCready said, many customers complained that the vans
were too expensive and had too many features.

The Grand Caravan SE starts at US$22,470, while the Chrysler Town
& Country LX starts at $23,190. That compares with a starting price
of $25,860 for the Odyssey and $23,895 for the Hyundai Entourage.

McCready said Chrysler's incentives have helped and consumers are
growing more familiar with the options, which include satellite
television and a backup camera. Darryl Jackson, Chrysler's
vice-president of sales, said the company is pleased with customer
response and doesn't think consumers are confused by the features.

``There's never too many presents for Christmas,'' he said.

Aaron Bragman, an auto analyst with the consulting firm Global
Insight, added that despite the loss in sales, Chrysler's decision
to kill the cheaper Dodge Caravan was a good one, since the company
will eliminate manufacturing costs and make more profit per minivan.
Jackson said earlier this month that Chrysler expects to win back
some Caravan customers later this year with the new Dodge Journey
crossover.

Jack Nerad, executive market analyst for Irvine, Calif.-based
Kelley Blue Book, said response to the minivans has not matched the
runaway success of other new products like the 2008 Honda Accord or
the 2008 Chevrolet Malibu. Accord sales were up 25 per cent in
November, while dealers had only a seven-day supply of Malibus in
November. Chrysler wouldn't give numbers on its minivan inventories.

Nerad said Chrysler, which became a private company in August and
is undergoing a massive restructuring, may not have the cash to get
its message out. Nerad estimated that GM's Malibu ad campaign costs
well over $100 million.

``The general perception is, these days, that the Odyssey is
probably a superior product and the Toyota Sienna is a good
product,'' Nerad said. ``Chrysler needed to throw that kind of
marketing dollar at it to get people to consider it.''

Competition is especially fierce because the segment is shrinking
as more buyers move to options like crossovers. U.S. minivan sales
were down 20 per cent through November. Bragman said minivan sales
are expected to continue to fall through 2012, when they might pick
up again.

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